U.S. home prices decreased -0.2% in August compared with July but were up 1.2% compared with August 2024, according to the latest First American House Price Index report.
It was the slowest rate of annual home price appreciation since February 2012, the firm says.
Home price growth reported in the previous month’s report was revised down by 0.1 percentage points, from -0.2% to -0.3%.
“House price growth nationally slowed further in August, dropping to the slowest pace since 2012 and signaling a shift toward a more balanced market after the rapid price acceleration during the pandemic,” says Mark Fleming, chief economist at First American, in the report. “For prospective buyers, this slowdown offers a welcome breather as incomes outpace house price growth and mortgage rates ease to their lowest level of the year. At the same time, homeowners still have record levels of equity—cumulative price appreciation since early 2020 is still up 56 percent. The result is more opportunities for buyers to get in the market, especially existing homeowners looking to tap their significant equity gains.”
Home prices, however, continue to rise in the luxury market. Luxury buyers, armed with equity and cash, are driving price appreciation at the high-end.
“Affordability constraints are shaping price dynamics across market segments,” says Fleming. “When averaging across the top 30 markets we track, annual price growth has been softest in the starter-home tier, while the luxury segment has outperformed. In an environment where higher mortgage rates weigh heavily on first-time buyers, luxury buyers—often less affected by the rate ‘lock-in’ effect because they can pay in cash or leverage equity from a previous home sale—are driving stronger appreciation at the top end of the market.”
Photo: Peter Thomas